2007 (8) TMI 172 - AT - Central Excise

Manufacturing of weld mesh (chain links) on job work basis not completed at single premises, even though job-worker would be called as manufacturer and SSI exemption shall be available - Excise officer having jurisdiction only on one premises cannot deny the exemption

Summary

Issues:
- Demand of duty and penalty under extended period of limitation
- Denial of benefit of Notification No. 83/94-C.E. to the assessee
- Definition of "factory" under Section 2(e) of the Central Excise Act
- Whether poultry farmers can be considered manufacturers
- Requirement of producing undertakings by poultry farmers for SSI exemption

Analysis:

1. The Commissioner of Central Excise demanded duty and penalty from the appellants for weld mesh cleared to poultry farms during a specific period invoking the extended period of limitation.

2. The demand of duty was linked to the denial of the benefit of Notification No. 83/94-C.E. to the assessee. The notification exempted excisable goods subject to certain conditions, including the use of job-worked goods in the factory of the raw material-supplier. The appellants manufactured chain links out of raw material supplied by poultry farms, which were used in the fabrication of poultry cages.

3. The Commissioner denied the benefit of the notification due to non-compliance with the condition that the goods must be used in the factory of the raw material-supplier. However, the Tribunal found that the goods were used in the fabrication of cages, which were specified for SSI exemption, and argued that the activity met the definition of a "factory" under Section 2(e) of the Central Excise Act.

4. The Tribunal also addressed the doubt raised by the Commissioner regarding whether poultry farmers could be considered manufacturers. The appellants successfully argued that any poultry farmer manufacturing excisable goods should be termed a manufacturer.

5. The Tribunal concluded that the appellants were entitled to the benefit of the notification, and the procedural requirement of producing undertakings by poultry farmers was deemed a minor formality. The actual use of the goods in the fabrication of cages was admitted, making the undertaking insignificant. Denying the benefit based on procedural grounds was considered unjust, and the appeal was allowed, setting aside the Commissioner's order.